What Trumps Investment Performance and Asset Allocation?

A recent study from the Principal Financial Group measured the impact on retirement account balances from three key variables: investment performance, asset allocation, and the amount of savings by the defined contribution plan (DC) participant.  Their key findings:  

  • Over long periods of time, investment performance by itself has a mild impact on the size of a participant's account balances.
  • By itself, the moderate positive impact of a more aggressive asset allocation is not enough to meet retirement income needs.
  • A DC plan participant's rate of salary deferral is by far the most important variable driving the amount of retirement assets the participants accumulates over the long term.

Click here for "Pursuing 'Retirement Plan Success' During Participants' Accumulation Years" from the Principal Financial Group.

Scott Middleton